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Israel is flouting the “friendly” rules of espionage to steal U.S. trade and tech secretsJOE SOHM/2/VISIONSOFAMERICA/OCEAN/CORBIS

Whatever happened to honor among thieves? When the National Security Agency was caught eavesdropping on German Chancellor Angela Merkel’s cell phone, it was considered a rude way to treat a friend. Now U.S. intelligence officials are saying—albeit very quietly, behind closed doors on Capitol Hill—that our Israeli “friends” have gone too far with their spying operations here.

According to classified briefings on legislation that would lower visa restrictions on Israeli citizens, Jerusalem’s efforts to steal U.S. secrets under the cover of trade missions and joint defense technology contracts have “crossed red lines.”

Israel’s espionage activities in America are unrivaled and unseemly, counterspies have told members of the House Judiciary and Foreign Affairs committees, going far beyond activities by other close allies, such as Germany, France, the U.K. and Japan. A congressional staffer familiar with a briefing last January called the testimony “very sobering…alarming…even terrifying.” Another staffer called it “damaging.”

“No other country close to the United States continues to cross the line on espionage like the Israelis do,” said a former congressional staffer who attended another classified briefing in late 2013, one of several in recent months given by officials from the Department of Homeland Security (DHS), the State Department, the FBI and the National Counterintelligence Directorate.

The intelligence agencies didn’t go into specifics, the former aide said, but cited “industrial espionage—folks coming over here on trade missions or with Israeli companies working in collaboration with American companies, [or] intelligence operatives being run directly by the government, which I assume meant out of the [Israeli] Embassy.”

An Israeli Embassy spokesman flatly denied the charges Tuesday after initially declining to comment. Aaron Sagui told Newsweek “Israel doesn’t conduct espionage operations in the United States, period. We condemn the fact that such outrageous, false allegations are being directed against Israel.” Representatives of two U.S. intelligence agencies, while acknowledging problems with Israeli spies, would not discuss classified testimony for the record. The FBI would neither confirm nor deny it briefed Congress. A State Department representative would say only that staff in its Consular and Israel Palestinian Affairs offices briefed members of Congress on visa reciprocity issues.

Of course, the U.S. spies on Israel, too. “It was the last place you wanted to go on vacation,” a former top CIA operative told Newsweek, because of heavy-handed Israeli surveillance. But the level of Israeli espionage here now has rankled U.S. counterspies.

“I don’t think anyone was surprised by these revelations,” the former aide said. “But when you step back and hear…that there are no other countries taking advantage of our security relationship the way the Israelis are for espionage purposes, it is quite shocking. I mean, it shouldn’t be lost on anyone that after all the hand-wringing over [Jonathan] Pollard, it’s still going on.”

Israel and pro-Israel groups in America have long lobbied U.S. administrations to free Pollard, a former U.S. naval intelligence analyst serving a life sentence since 1987 for stealing tens of thousands of secrets for Israel. (U.S. counterintelligence officials suspect that Israel traded some of the Cold War-era information to Moscow in exchange for the emigration of Russian Jews.) After denying for over a decade that Pollard was its paid agent, Israel apologized and promised not to spy on U.S. soil again. Since then, more Israeli spies have been arrested and convicted by U.S. courts.

I.C. Smith, a former top FBI counterintelligence specialist during the Pollard affair, tells Newsweek, “In the early 1980s, dealing with the Israelis was, for those assigned that area, extremely frustrating. The Israelis were supremely confident that they had the clout, especially on the Hill, to basically get [away] with just about anything. This was the time of the Criteria Country List—later changed to the National Security Threat List—and I found it incredible that Taiwan and Vietnam, for instance, were on [it], when neither country had conducted activities that remotely approached the Pollard case, and neither had a history of, or a comparable capability to conduct, such activities.”

While all this was going on, Israel was lobbying hard to be put on the short list of countries (38 today) whose citizens don’t need visas to visit here.

Until recently, the major sticking point was the Jewish state’s discriminatory and sometimes harsh treatment of Arab-Americans and U.S. Palestinians seeking to enter Israel. It has also failed to meet other requirements for the program, such as promptly and regularly reporting lost and stolen passports, officials say—a problem all the more pressing since Iranians were found to have boarded the missing Malaysia Airlines flight with stolen passports.

“But this is the first time congressional aides have indicated that intelligence and national security concerns also are considerations in weighing Israel’s admission into the visa waiver program,” Jonathan Broder, the foreign and defense editor for CQ Roll Call, a Capitol Hill news site, wrote last month. He quoted a senior House aide as saying, “The U.S. intelligence community is concerned that adding Israel to the visa waiver program would make it easier for Israeli spies to enter the country.”

The Israelis “thought they could just snap their fingers” and get friends in Congress to legislate visa changes, a Hill aide said, instead of going through the required hoops with DHS. But facing resistance from U.S. intelligence, Israel recently signaled it’s willing to work with DHS, both Israeli and U.S. officials say. “Israel is interested in entering into the visa waiver program and is taking concrete steps to meet its conditions,” Israeli Embassy spokesman Aaron Sagui toldNewsweek. “Most recently, the U.S. and Israel decided to establish a working group to advance the process,” Sagui added, saying that “Deputy Minister of Foreign Affairs Zeev Elkin will head the Israeli delegation.” He refused to say when the Elkin delegation was coming.

Congressional aides snorted at the announcement. “The Israelis haven’t done s**t to get themselves into the visa waiver program,” the former congressional aide said, echoing the views of two other House staffers working on the issue. “I mean, if the Israelis got themselves into this visa waiver program and if we were able to address this [intelligence community] concern—great, they’re a close ally, there are strong economic and cultural links between the two countries, it would be wonderful if more Israelis could come over here without visas. I’m sure it would spur investment and tourist dollars in our economy and so on and so forth. But what I find really funny is they haven’t done s**t to get into the program. They think that their friends in Congress can get them in, and that’s not the case. Congress can lower one or two of the barriers, but they can’t just legislate the Israelis in.”

The path to visa waivers runs through DHS and can take years to navigate. For Chile, it was three years, a government official said on a not-for-attribution basis; for Taiwan, “several.” Requirements include “enhanced law enforcement and security-related data sharing with the United States; timely reporting of lost and stolen passports; and the maintenance of high counterterrorism, law enforcement, border control, aviation and document security standards,” a DHS statement said.

Israel is not even close to meeting those standards, a congressional aide said. “You’ve got to have machine-readable passports in place—the e-passports with a data chip in them. The Israelis have only just started to issue them to diplomats and senior officials and so forth, and that probably won’t be rolled out to the rest of their population for another 10 years.”

But U.S. counterspies will get the final word. And since Israel is as likely to stop spying here as it is to give up matzo for Passover, the visa barriers are likely to stay up.

As Paul Pillar, the CIA’s former national intelligence officer for the Near East and South Asia, told Newsweek, old habits are hard to break: Zionists were dispatching spies to America before there even was an Israel, to gather money and materials for the cause and later the fledgling state. Key components for Israel’s nuclear bombs were clandestinely obtained here. “They’ve found creative and inventive ways,” Pillar said, to get what they want.

“If we give them free rein to send people over here, how are we going to stop that?” the former congressional aide asked. “They’re incredibly aggressive. They’re aggressive in all aspects of their relationship with the United States. Why would their intelligence relationship with us be any different?”